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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
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330.0000 Leases of Tangible Personal Property—In General—Regulation 1660
Annotation 330.2575
(a) In General
330.2575 Partnership Transactions. Two individuals formed two identical partnerships. One partnership manufactured tangible personal property which it sold to the second partnership for purposes of lease. The manufacturing partnership paid sales tax with respect to the gross receipts from the sales to the leasing partnership. The leasing partnership then leased the property without collecting or paying tax on lease receipts.
The partnership laws of California (Corp. Code sections 15001–15045) follow the aggregate theory, and under such theory a partnership with identical partners under one partnership name is the same partnership, (Park v. Union Mfg. Co. Cal.App.2d 401). Accordingly, for Sales and Use Tax purposes, there was only one partnership. Therefore, tax was not due on the transfer of the property from the manufacturing operation to the leasing operation. A person cannot sell to himself. Tax was due based on rental receipts. 12/3/76.